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Goldman, Morgan Stanley to hold most capital in post-stress test requirements

Written by Jasir Jawaid

The Federal Reserve announced capital requirements for banks that have more than $100 billion in total assets, with Goldman Sachs Group, Inc. and Morgan Stanley required to hold the most capital at 13.7% and 13.4%, respectively.

The new capital ratio, effective Oct. 1, combines the minimum capital requirement of 4.5%, the new stress capital buffer, or SCB, which is at least 2.5%, and a capital surcharge for certain global systemically important banks, which is at least 1.0%. Of the 34 companies tested, Deutsche Bank AG's U.S. arm was subject to the highest SCB at 7.8%.

A GSIB capital surcharge was applied to eight banks. JPMorgan Chase & Co.'s was the highest at 3.5%. Citigroup Inc. and Morgan Stanley were tied for second at 3.0% each.

The Fed also upheld stress test results for five banks that each asked the central bank to reconsider its ruling. Those banks were Citizens Financial Group Inc., Goldman Sachs, Regions Financial Corp., BMO Financial Corp. and Capital One Financial Corp. The central bank said an independent group found its stress test models worked as intended and that there were no errors.

This article was published by S&P Global Market Intelligence on the S&P Capital IQ Pro platform.


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